VA Borrowers To Get $54M In Relief: Navient Loan Settlement

VIRGINIA — Navient Corporation, one of the nation's largest student loan servicers, will provide relief totaling $1.85 billion to Virginia and other states to resolve allegations of unfair and deceptive student loan servicing practices and abuses in originating predatory student loans.

Virginia was one of 39 states to sue Navient, claiming that since 2009, despite representing that it would help borrowers find the best repayment options for them, Navient Corporation steered struggling student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans.

Virginia Attorney General Mark R. Herring said the agreement to settle the lawsuit will earmark $1.7 billion for debt cancellation, $95 million will go toward restitution, and Virginia student borrowers will receive more than $54.9 million in relief.

"More than one million Virginians struggle under the massive weight of student loan debt – something that has a negative effect on almost every aspect of their lives,” Herring said in a news release. “Student loan servicers who use deceptive practices and predatory lending tactics must be held accountable for taking advantage of the hardworking men and women who use their services. This agreement will give thousands of Virginians much needed debt relief and ensure that Navient makes substantial changes to their business practices for future student borrowers.”

As part of the agreement, Virginia will receive a total of $3,622,155 in restitution payments for 13,588 federal loan borrowers. Additionally, 1,972 Virginia student borrowers will receive a total of $51,329,607 in private loan debt cancellation.

Under the terms of the settlement, Navient will cancel the remaining balance on more than $1.7 billion in subprime private student loan balances owed by about 66,000 borrowers nationwide.

In addition, a total of $95 million in restitution payments will be distributed to about 350,000 federal loan borrowers who were placed in certain types of long-term forbearances.

The settlement also requires Navient to explain the benefits of income driven repayment plans and to offer to estimate income-driven payment amounts before placing borrowers into optional forbearances.

Additionally, the attorney general's office said Navient must train specialists who will advise distressed borrowers concerning alternative repayment options and counsel public service workers concerning PSLF and related programs. The company is also prohibited from compensating customer service agents in a manner that incentivizes them to minimize time spent counseling borrowers.

The settlement also requires Navient to notify borrowers about the U.S. Department of Education's recently announced PSLF limited waiver opportunity, which temporarily offers millions of qualifying public service workers the chance to have previously nonqualifying repayment periods counted toward loan forgiveness – provided that they consolidate into the Direct Loan Program and file employment certifications by Oct. 31, 2022.

Consumers receiving private-loan debt relief under the settlement will receive a notice from Navient. Federal loan borrowers who are eligible for a restitution payment will receive a postcard in the mail from the settlement administrator later this spring. Federal loan borrowers who qualify for relief under this settlement do not need to take any action except update orcreate their studentaid.gov account to ensure the U.S. Department of Education has their current address.
For more information, visit www.NavientAGSettlement.com.